Pressure on top clubs to drop crypto fan tokens
Socios owner denies trying to fix currency
PREMIER LEAGUE clubs are reviewing their multi-million pound relationship with fan tokens firm Socios after an investigation raised serious questions about its business practices.
Arsenal told The Mail on Sunday that they had approached Socios and parent company Chiliz for more details on the allegations around its chief executive Alexandre Dreyfus and the supposed non-payment of staff.
Supporters groups, meanwhile, have said the report highlights how leading sides have been too quick to enter into partnerships with crypto-based companies.
The investigation by the website Off The Pitch found that Dreyfus, a French internet entrepreneur, had advised against paying highprofile individuals to protect the value of his firm’s cryptocurrency. Staff also claimed they went unpaid until they informed Off The Pitch that they were prepared to take legal action against the Malta-based company.
Arsenal are one of six Premier League clubs who have partnered with Socios along with Aston Villa, Crystal Palace, Everton, Leeds United and Manchester City.
Socios is a blockchain-based platform on which fans can buy virtual tokens allowing them to engage with their club and potentially vote on minor decisions. The Socios app uses Chiliz’s eponymous cryptocurrency for transactions.
The company’s rapid expansion has drawn criticism from supporters’ groups concerned by the industry’s lack of regulation. Fan tokens can also fluctuate in valuation, potentially losing supporters money.
‘We are speaking with Socios to understand more about the allegations,’ an Arsenal spokesperson said, while insisting that the club had properly vetted Socios and Dreyfus.
‘We are not promoting fan tokens as a financial investment, and we are clear it is about engaging with the club by taking part in polls and competitions. However, we make people aware there are financial risks if they choose to invest.’
Four Socios ‘advisors’ working in Korea told Off The Pitch initially that they had not been paid what Dreyfus owed them in the cryptocurrency.
Discussing their situation via an internal Slack channel, Dreyfus told colleagues that distributing the currency would deflate its value. He was also dismissive of the advisors’ complaints. ‘With or without them, we will work,’ he wrote. ‘Gamers, we don’t care. They don’t understand business, even if they are celebs.’
Gamers were among the influencers signed up to promote Socios.
Dreyfus went on: ‘When you give free tokens, people can sell at any price. It doesn’t matter for them, so it makes the price going [sic] down… and the REAL investors who bought are losing money because of that.’
A Chiliz spokesperson strongly denied that Dreyfus was implying that the company wanted to control the value of the cryptocurrency and added that the amount of money involved was not big enough to affect Chiliz’s price.
The advisors were paid shortly after Socios management established that they were in contact with Off The Pitch.
Socios staff were also due to be paid in Chiliz but initially went unpaid until the terms of their contract were rewritten, leaving them with less money than they would have earnt had they cashed in their currency sooner.
Francesco Lucia, Chiliz’s ‘head of people’, confirmed staff contracts were restructured in an audio recording obtained by the investigative team.
The Football Supporters’ Association said the investigation highlighted the need for clubs to vet potential commercial partners in the crypto industry.
An FSA spokesperson said: ‘Clubs have been all too quick to enter into partnerships which seek to monetise fan engagement — promoting products that are misleading and often trivialise the nature of crypto-investments.’